The challenges of and opportunities for Monetization of mobile networks

1. Monetization: Just Getting Started
Posted by brwalsh on Apr 14, 2011 12:29:59 PM
In Cisco’s Mobile Internet group, we have had a busy & informative past few months engaging directly
with many of our mobile operator customers, and I wanted to share some perspectives. First of all, the
tally of activities included:
 Cisco released its annual Visual Networking Index (VNI) Global Mobile Data Traffic
Forecast showing 2010 global mobile data traffic nearly tripling for the third year in a row. By
2015, the average mobile device will generate 17x more traffic than 2010
 Cisco launched a comprehensive, integrated framework for mobile networks
called M.O.VE (Monetization, Optimization, and Video Experience), which got a very good
reception from customers as an architectural foundation to meet operator challenges
 Mobile World Congress and CTIA gave us the opportunity to meet with over one hundred
operators, and discuss how they can meet the challenges of increasing revenues, reducing
mobile data costs, and satisfying ever-increasing customer expectations.
 We released a custom Cisco-commissioned Heavy Reading study, based on a global survey of 50
operators, which uncovered very interesting perspectives, expectations, and experiences in the
areas of Monetization, Optimization, and Video services.

2. So with all that going on, I will provide some summary observations in a series of blog entries over the
next several weeks. I’ll especially focus on the challenges of and opportunities for Monetization of
mobile networks.
 Monetization is moving from ideas to tangible initiatives
As they continue to build out 3G and now LTE data networks, operators are now very focused on
gaining a greater return and sustained revenue growth from these investments. Monetization is
moving from the possible to the tangible and concrete in terms of deployable enabling
solutions, offerings of a variety of “Use Cases”, some initial operator experiential data to learn
from, and the evolution of operator business and revenue models.
 Operators are identifying revenue-generating priorities and evolving business models.
Operators are evolving their business models to meet the dual goals of 1.) increasing the
number of mobile data subscribers (e.g., while smartphone sales were up over 70% in 2010,
they are still only one-half of all handsets sold in Western Europe and U.S., according to
Gartner); and 2.) generating better yield from existing and higher-end users. In most regions of
the world, operators have moved away from all-you-can-eat mobile data plans towards a
revenue model based on intelligent traffic management and by promoting market segmented
offers linked to usage. Operators have a view towards which of the many possible Use Cases are
expected to achieve success over the near and medium timeframe. I’ll examine several of these
Use Cases in detail in subsequent blogs in this series.
 Operators are moving to customer-centric service offers.
IP network intelligence and increasing network performance are enabling operators to offer
users many ways to personalize their service subscriptions and usage, e.g., letting users pay for
what they need with multiple speed/quota tiers and flexible usage models (day pass, off-peak
rates, family or group data quotas, etc.). You want examples of operator services?! Come back
as we expand upon this in detail in this blog series.
 Operators are pursuing 2-sided business model (B2B2C) and revenue partnerships with a
diverse range of media and content providers.
Operators report they are already trying to strike deals with movie/video services, music services, and
other content providers. Key operator network enablers for such partnerships include tiered services
and zero-rating, where consumption of a content partner’s service would benefit from a guaranteed
high bandwidth rate while at the same time the subscriber’s data usage for these services wouldn’t be
deducted from monthly quotas. Many operators believe that their business models going forward will
more and more be based on offering content as part of mobile data packages. We'll discuss some early
operator examples of these types of B2B2C services in the coming blogs.
 Operators are investing in network capabilities necessary to evolve business models.

3. Operators are actively trialing and deploying enabling solutions for Monetization. Mobile operators
show high interest in the following network capabilities as key to their Monetization strategies and
service offers:
o Policy and charging control (PCC) solutions - most operators are actively evaluating,
trialing or deploying PCC
o Traffic Optimization and Bandwidth Management – scored highest in the HR survey
cited above;
o Priority Handling – in spite of challenges implementing QoS in 3G/HSPA networks;
o Zero-rating – especially for content provider partnerships, as well as to incent users to
mobile data (e.g., zero-rate Facebook for 6 months).
Policy and charging control (PCC) solutions are viewed as critically important to offer tiered services and
flexible packages such as group data plans, premium video services, off-peak usage models, quota
management, etc. Many operators view PCC implementation as a pre-condition for many of the
targeted Monetization use cases and for the enablement of content provider partnerships. It’s essential
that any enablers can work across 3G and LTE networks so that end-users receive a unified experience.
In the remaining blogs in this series, we will take a closer look at several of the targeted Monetization
Use Cases, examine what it takes to deploy, and assess expectations for adoption rates and revenues –
as perceived by operators in our customer engagements.
How about you? Do you see these or other trends in Monetization?